Janice France-Petit: Helping aging parents with their finances

As parents age, there may come a time when adult children need to step in to assist with financial matters. When and how to offer that help may involve some careful planning. And if parents own a business, the issues may be even more complex.

Putting a contingency plan in place early may make future transitions easier for everyone. Discussing parents’ wishes ahead of time may make both the adult children and their parents more comfortable talking about financial issues.

Here are some points to consider in order to help aging parents who own their own business:

Plan earlyThere are several steps families may take when parents are still relatively young and in good health that will help in later years. Among the documents they may want to develop and keep current are wills, trusts, powers of attorney for financial affairs and advance health care directives.

Adult children should know where these and other important financial and legal documents such as investments, mortgage information and insurance policies are kept and which attorney, financial adviser and bank their parents use.

Family meetingWhile both parents are still healthy, setting up one or more family meetings to discuss their wishes may help prevent misunderstandings later. A third party, including an objective financial advisor, attorney or family friend, may help facilitate the meeting.

Streamlining financesAdult children may suggest that parents keep their business and personal accounts at one bank in order to streamline their finances. With services such as online banking, they may be able to transfer funds between accounts, providing more options for managing their money and making it easier for adult children to assist with needed transactions.

Business succession planLong before parents plan to retire from their family business, adult children may want to encourage them to work with an advisor to put a formal exit strategy in place. Not all children wish to take over the family business. However, in the event that they do, it may be wise to familiarize themselves with overall activities and finances in advance, so they can step in if needed.

Parents need to decide who to pass ownership to, whether it is an outsider or a family member. If they decide to pass it to someone who isn’t a family member, they will need to plan how to share that information. If partners are involved, parents may want to draw up a buyout agreement.

They also may want to purchase key-person insurance to ensure there is capital to continue operating the business. If the business will remain in the family, parents need to decide which family members will retain ownership. They may want to arrange for an independent appraisal of the business to determine its worth. Tax implications are another consideration.

Stepping inAdult children need to be watchful for indications that aging parents may increasingly require more help with personal and business finances. For example, unpaid bills may be stacking up or checkbooks may not be balanced.

Planning ahead and lending support when parents are no longer able to cope financially by themselves may ensure the continuing financial well-being of the aging parents as well as their business.

The foregoing article is intended to provide general information about how adult children can help aging parents maintain their personal and business finances and is not considered financial or tax advice from Union Bank. Please consult a banker or attorney or business, financial or tax advisor.

Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, Santa Clarita Valley, San Fernando Valley and Antelope Valley region. Visit www.unionbank.com for more information.

The foregoing article is intended to provide general information about corporate gift giving and is not considered financial or tax advice from Union Bank. Please consult your financial or tax advisor or the IRS.

France-Pettit’s column represents her own views, and not necessarily those of The Signal. Visit www.unionbank.com for more information.